Trump order allows end-around ACA rules

An executive order signed by President Donald J. Trump aims to expand health care coverage options, primarily for small businesses.

The order includes three key provisions.

First, it allows small businesses to band together to buy insurance collectively for their workers and allows plans to be sold across state lines, in theory extending the buying power that comes with a larger base of employees to smaller businesses.

Gage Skidmore/Wikimedia Commons/CC BY-SA 2.0

President Trump

“This will create tremendous competition,” President Trump said Oct. 12. “The competition will be staggering. Insurance will be fighting to get every single person signed up. ... This will allow thousands of small business employers to have the same purchasing power as large employers to get more affordable and generous insurance for their workers.”

Employers participating in association health plans “cannot exclude any employee from joining the plan and cannot develop premiums based on health condition,” according to a White House statement on the executive order.

Second, the executive order allows broader use of limited duration health insurance – short-term policies that are not intended to be comprehensive offerings and are not subject to Affordable Care Act coverage requirements.

These plans “typically feature broad provider networks and high coverage limits,” according to the White House statement. The plans are geared toward “people between jobs, people in counties with only a single insurer offering exchange plans, people with limited coverage networks, and people who missed the open enrollment period but still want insurance,” according to the executive order.

Association health plans and the short-term, limited duration insurance will not need to fully cover the ACA’s essential health benefits package; instead, they are intended to be alternatives to “expensive, mandate-laden [ACA] insurance,” according to the executive order.

Third, the order directs the secretaries of Health & Human Services, Treasury, and Labor to “explore how they can allow more businesses to use tax-free health reimbursement arrangements, or HRAs, to compensate their employees for their health care expenses,” according to the White House statement.

HRAs allow employers to cover select items, such as copayments, deductibles, and other items, that are not covered by the insurance plan offered to employees.

“With these actions, we are moving toward lower costs and more options in the health care market and taking crucial steps toward saving the American people from the nightmare of Obamacare,” President Trump said, adding that the White House will continue to put pressure on Congress to finish repeal and replace activities. He also said that Congress will be pursuing block grants, presumably for Medicaid, which he said he had the votes to accomplish.

The action taken today by the White House is already receiving pushback.

The American College of Physicians “has said repeatedly that any attempts by Congress to ‘repeal and replace’ the ACA must first do no harm to patients,” Susan Thompson Hingle, MD, chair of the American College of Physicians Board of Regents, said in a statement. “This executive order utterly fails that test.”

Under the association health plans “small employers would be allowed to purchase health plans that do not meet the ACA’s requirement to provide essential health benefits,” Dr. Hingle noted. “This means that plans would no longer have to cover medical patients needs; plans could choose not to cover pregnancy, maternity, and newborn care, or even chemotherapy. This would also mean that the ACA’s prohibition on annual and lifetime limits on coverage would no longer apply to any service an employer decides is not essential. These changes would be devastating for patients who need access to the ‘nonessential’ services, leaving them with potentially millions of dollars in out-of-pocket costs despite being insured.”

Association health plans also could further destabilize the individual market if healthy workers – who currently may have purchased coverage on the individual market – shifted to less comprehensive association health plans, leaving even fewer healthy individuals in the individual market. “Insurers will be forced to either leave the markets in droves or charge much higher premiums.”

The rules may not be able to provide the relief that President Trump has promised, according to Julius Hobson, a Washington-based health care lobbyist

“The changes that he is talking about are going to require departments and agencies to promulgate rules. They just simply can’t do that by fiat,” Mr. Hobson said in an interview. “I am not sure that we will see an immediate impact on the executive order. ... When you get down to the nitty-gritty of implementation, we could be a bit away from seeing anything that actually has impact.”